Russian Philanthrocapitalism

RUSSIAN PHILANTHROCAPITALISM
Cultural Politics, Volume 15, Issue 1, 105-120.© 2019 Duke University Press

This article investigates philanthropic practices among Russia’s hyper-rich. It ponders whether and to what extent philanthrocapitalist concepts are compatible with traditional Russian approaches to elite philanthropy, which have been shaped and controlled by the country’s domineering state. Some of the multimillionaires and billionaires interviewed for this research have married philanthrocapitalist ideas with beliefs molded by their Soviet past and their self-perception as belonging to the intelligentsia. Such distinct and seemingly morally superior identities, together with active engagement in philanthropy, act as a lever with which to foster trust in the new social hierarchies and legitimize them across generations.

Delving into the world of Russia’s hyper-rich, this article investigates the historical and cultural features of their philanthropic practices and asks to what extent they are compatible with the idea of philanthrocapitalism. Such a research agenda raises several issues: First, these mega-rich individuals are striving to justify their fortunes in a society where, not so long ago, wealth was considered a crime and where today the gap between rich and poor has grown to become one of the widest in the world. Second, philanthrocapitalism is, by design, the antithesis to Russia’s history of philanthropy, which has always existed within the control of a highly centralized state. Third, the new wealthy elite in Russia lacks the birthright of a capitalist class that was brought up with bourgeois values and had a sense of duty and entitlement instilled into them.

This is highly problematic: as Max Weber reiterated, the holders of power and wealth want to believe that they deserve their good fortunes because of who they are and what they constitute (1991: 271). With the first generation of Russia’s hyper-rich having cemented their wealth, it has become more important to them to feel that they deserve the positions they occupy and the benefits they have accrued. As a consequence of this change in priorities, social responsibility has become obligatory, resulting in a rapid rise in charitable giving in the new millennium. Philanthropy is particularly important for the older upper-class members, who have begun to think about the legacy they will leave after their death.

All this was not an issue in the early post-Soviet period. The 1990s were dominated by the extreme prestige of money, no matter how it was acquired. Now that they have emancipated themselves from the urge to make more money, they have the freedom to ponder their cultural and spiritual identities — one of the luxuries that Pierre Bourdieu (1984) described as the privilege of being rich. Accordingly, upper-class Russians have sought to engage in more intellectual activities and display more cultured traits. However, they lack the cultural templates of a bourgeois predecessor and rely instead on the Russian intelligentsia, whose values were filtered through the Soviet experience (Schimpfössl 2018: 97, 83). As I argue in this article, this legacy is to a large extent compatible with philanthrocapitalist ideas.

Defining Philanthrocapitalism and Elite Philanthropy

The term philanthrocapitalism stems from Matthew Bishop’s and Michael Green’s Philanthrocapitalism: How the Rich Can Save the World and Why We Should Let Them(2008). The foreword to the book was written by Bill Clinton, whose foundation trades as a model example of philanthrocapitalism, as do the Bill and Melinda Gates Foundation and the Chan Zuckerberg Initiative. The concept postulates that the application of for-profit business methods in philanthropy is superior to traditional public-sector or civil-society approaches and has a substantially greater impact on social change. Philanthrocapitalism is also applied to venture capitalists, social investors and entrepreneurs, who believe that their business activities stimulate the wider social good on a global scale. Advocates of philanthrocapitalism devote a lot of attention to measuring the impact of their work. They also leverage money other than their own, primarily from governments.

Many scholars and commentators have fundamentally questioned the positive impact of this supposedly innovative approach to philanthropy. Linsey McGoey (2012: 186 – 89) does not see anything new about philanthrocapitalism: for over a century, philanthropists have sought to model philanthropic giving on corporate practices; conflating the market economy’s benefits for the common good was already part of Adam Smith’s Wealth of Nations. The one thing that McGoey recognizes as truly new is the previously unseen level to which philanthrocapitalists are happy to admit how financially lucrative such an approach can be with regard to their business (193).

More importantly, critics argue that large-scale giving has corrosive effects on democracy (Edwards 2010; McGoey 2015; Callahan 2017; Reich 2018). Philanthropists are not elected by anybody and, hence, not accountable to anyone but themselves. They pursue their individual policy agendas, without being able to foresee the consequences, even though their choices may affect millions of people. Philanthropic choices might well counteract those of the public as to how to allocate funds (Reich 2018: 10). Tax reductions for philanthropy deprive state treasuries of resources which could otherwise be used for social welfare and public infrastructure. The deleterious effect on democracy is particularly stark where taxpayers’ money is used to match private donations.

In contrast to such a macro-level critique, sociologists of elites typically explore philanthropy from a perspective of elite legitimation and reproduction. One of the most seminal studies in this tradition is Why the Wealthy Giveby Francie Ostrower (1995), who explored the elite culture of affluent donors in New York City.1Ostrower paid particular attention to her wealthy respondents’ class identity and how they use philanthropy to promote an elitist way of life. This understanding of elite philanthropy is central to this article because it outlines the specifics of philanthropy as a means to gain legitimacy, secure and control class boundaries, and perpetuate social positions across generations.

Philanthropy has been defined in many different ways, and there are long debates as to how it relates to charity. I draw on Ostrower’s definition of philanthropy, which includes charity and patronage as well as alms giving and the encouragement of self-help (1995: 4, 20). In her understanding, charity is specifically directed toward the poor, whereas philanthropy has broader aims and objectives. The latter does include charity, but it also encompasses the wider practices of private giving to the arts, environmental causes, health and rehabilitation, education, universities, museums, religious organizations, parks, cultural institutions, youth, and urban development.

Empirical Data

The material analyzed in this article is drawn from a set of eighty interviews with entrepreneurs and their spouses or children, which I conducted between 2008 and 2017, mostly in Moscow. Their characteristics are typical of the post-Soviet elite, the most salient of which is that they are highly educated (Kryshtanovskaia 2004: 341 – 42). For this article I selected twelve interviewees, eight men and four women. They all are philanthropists and run their own foundation or charity (many of them parallel to their corporate foundations) or were cofounders of a foundation and have since been heavily involved. The eight men are the breadwinners in their families. Three of the four women are the wives of wealthy Russian men; the fourth is a sibling. Except for one couple, whom I interviewed in 2009, these selected interviews took place between 2015 and 2017.

The two earlier interviews, which took place in 2009, were with Maria Eliseeva and Ilia Segalovich, the cofounder of Yandex, the world’s fourth largest search engine and Russia’s equivalent to Google. Segalovich died from cancer in 2013, not having reached the age of fifty. His wife, Eliseeva, set up her charity Deti Marii (Maria’s Children) in the early 1990s, and both were active in running its activities.

Veronika Zonabend is married to Ruben Vardanian, born in 1968 and former CEO and controlling shareholder of Troika Dialog, an investment bank. His assets were worth $950 million in 2017.2Through their foundation, Initiatives for Development of Armenia, they run an international boarding school, United World College Dilijan in Armenia, which Veronika looks after. Her husband is heavily involved in the development of Skolkovo Moscow School of Management, which he cofounded and where a research center was created in 2013 for the study of philanthropy, social entrepreneurship, and ways to pass down assets from the first generation of wealthy people in Russia to the next.

Irina Sedykh is the wife of the metallurgy tycoon Anatolii Sedykh, the main shareholder of United Metallurgical Company (OMK), Russia’s second-largest pipe producer and biggest manufacturer of train wheels. He is also the president of the OMK-Uchastie (OMK-Participation) Charity Fund, which focuses on education, health, and children with special needs. Irina Sedykh chairs the fund’s supervisory board and is heavily involved in its activities.

The fourth woman is Irina Prokhorova, born in 1956 and the sister of Mikhail Prokhorov, who was born in 1965 and topped Russia’s rich list in 2009 with assets of $22.6 billion (down to $8.9 billion in 2017). Prokhorova is the founder of New Literary Observer, the main intellectual journal and publishing house in Russia. She leads a philanthropic foundation named after her brother.

Piotr Aven, born in 1955, is chairman of Russia’s biggest private bank, Alfa-Bank. In 2016 his assets were worth $4.6 billion. He is cofounder of Liniia Zhizni (Life Line), a charity that organizes surgeries for children, and of Genesis Philanthropy Group, which supports Russian-speaking Jews worldwide. Aven regularly lends pieces of his art collections to museums. He is a trustee of several museums and universities.

Vadim Moshkovich, born in 1967, is the head of the agro-industrial holding company Rusagro, Russia’s largest sugar and pork producer. In 2016 his assets amounted to $2.3 billion. His main philanthropic activity is the development of a flagship school for highly gifted children. Fifty million dollars of his private money has gone into the project, and $150 million into an endowment fund that will help keep things running.

Alexander Svetakov, born in 1963, also specializes in schools; however, in contrast to Moshkovich’s school, these schools are for disabled children. Svetakov is the owner of Absolut Group, which has interests in real estate, trading, and insurance. His assets amount to $3.3 billion in 2017.

Roman Avdeev, born in 1967, owns Moscow Credit Bank, one of Russia’s most significant in terms of assets. His wealth in 2014 was assessed at $1.4 billion. He runs a foundation working with orphans and foster parents.

Ziyavudin Magomedov, also born in 1967, is the main owner of Summa Group, which invests in port logistics, engineering, construction, telecommunications, and oil and gas. His wealth amounted to $1.4 billion in 2014. His PERI Charitable Foundation largely works in Dagestan, his country of birth; however, their financing might dry up soon. Magomedov was about to fly to the United States with his family in late March 2018 when he and his brother were arrested and charged with setting up an organized crime group and embezzling state funds. On May 30 the court extended the arrest until August 5. In the very worst-case scenario, Magomedov could be handed down a prison sentence of thirty years (Starinskaia 2018).

The remaining two interviewees are not billionaires. How rich they are is difficult to tell. Igor Tsukanov, born in 1962, is a former financier and the only one who permanently lives in London. He has never publicly given a price tag to his wealth. His collection of postwar Russian art is one of the largest in the world. He organizes his various philanthropic projects through the Tsukanov Family Foundation. Oleg Sysuev, born in 1953, is an Alfa-Bank board member. In the 1990s, he was deputy head of the presidential administration, the government’s vice prime minister, and minister of labor. Sysuev is a founding member of Liniia Zhizni, together with Piotr Aven and others.

Philanthrocapitalist Ideas among Russia’s Hyper-Rich

The current generation of hyper-rich grew up on Soviet propaganda, which taught them that the capitalist system inevitably spawns gains for a few to the detriment of the masses. Reality in the 1990s very much confirmed this Soviet propaganda take on capitalism: while the new wealthy elites speedily enriched themselves, the country’s gross domestic product shrank by half, the population’s living standards crumbled, and poverty exploded (Scheidel 2017: 222).

During the long oil boom of the 2000s, the memory of Soviet propaganda and the 1990s cut-throat capitalism faded. This allowed philanthrocapitalist ideas to be articulated. The oligarch Aven believes that the private sector will be supplanting the state and that private money will increasingly finance social infrastructure, covering everything from medicine to culture. He sees this as inherent in the logic of the market, stating, “Where capitalism develops, private philanthropy will emerge and grow.” Aven considers a strengthening of philanthropy to be of particular importance to Russia, as this will help rehabilitate private property.

Liniia Zhizni, set up by the shareholders of Aven’s bank, was the brainchild of the oligarch Mikhail Fridman. Sysuev, one of the shareholders, told me, “Misha [Mikhail] used his success in business and applied it to charity: business technology, good management, motivated with clear tasks, audit, and control.” Sysuev pondered the weaknesses of this approach: “What we don’t have enough of are those emotional drivers, enticed by the soul,” he admitted. “But maybe that’s also good. We don’t give money if we can’t control it to the end.”

According to the former financier Igor Tsukanov, successful businesspeople know best how to achieve a particular result, how to do a project, and how to organize a big event. They can easily switch from one project to another, and they can apply their skills to any field, not just business. After Tsukanov stopped doing business, he wanted to do something new: “But the new thing had to have parameters: clear objectives, a time frame, and a budget. These are the skills I acquired in business and applied to art.” He regards his own philanthropy as highly structured and is very happy with what he is doing; he is now one of the world’s leading collectors of postwar Russian art: “Exhibitions require efforts, logistics, and intellectual input. They are large projects.”

Other interviewees did not articulate philanthrocapitalist ideas that explicitly, but there were elements of it. Zonabend, who calls herself and her husband, Vardanian, social entrepreneurs, relates to philanthropy in the same way she relates to the market. They were among the first who started “helping systematically. . . . You need a system, otherwise there is no impact, and this system needs to be sustainable in the long run.” Magomedov’s foundation runs an innovation business incubator to develop entrepreneurial IT technology skills among young people in Dagestan. In his project, Moshkovich wants “to have the goals clearly defined and to understand how to get there, how to measure success, etc.” He is concerned about producing graduates whose skill set can compete with the West.

Philanthrocapitalism promotes the idea that competitive principles epitomize freedom of choice and individualism. The desire to express individualism and to experience this freedom of choice has a paradoxical consequence in Russia: people barely differ in their approaches. The vast majority of charity donors support children, and giving aid to children is the major form of charity in Russia (Khodorova 2014; Skolkovo 2015: 78, 81). This is, first, because only children are considered trustworthy in a society that is largely based on distrust (Hosking 2014). Second, support for children is an investment in the future of Russia, an issue the new upper class has become increasingly concerned about. Third, support for children follows the Russian tradition of charity that emphasizes benevolence toward passive alms takers (Dinello 1998).

Michael Edwards (2008) cautions that competitive principles should be applied to the third sector. They are likely to push nonprofits to economize in key areas of their work, eschew the most complicated and expensive issues, and avoid those most difficult to reach. In a pure form, competitive principles inevitably exclude care for groups with little “use” for society. This is, however, not the main reason Russian philanthropists are little concerned about groups other than children, such as migrants, homeless people, drug addicts, ex-prisoners, or the long-term unemployed. Here near – social Darwinist attitudes, which were prevalent in the dog-eat-dog world of the 1990s, prevail: those who can work should do so and earn their own living, and those who are considered to have caused their own misery are not deserving of mercy (Schimpfössl 2018: 110).

The State and Philanthropy in Russian History

Nascent philanthrocapitalist ideas are confronted by an intrusive Russian state. In this respect, historically in Russia, there is very little ground for philanthrocapitalists to build on. Philanthropy was initially confined to the aristocracy and the monarchy. The tsars kept tight control over who was allowed to give and to whom. At the same time they were showing largesse themselves, as well as permitting the ladies of the court to keep themselves occupied with philanthropic giving. The results were a great number of educational and health-care institutions as well as institutions of art and culture (Khodorova 2014). An example of this is the State Hermitage, based on the collection of Catherine the Great, which opened to the public in 1852. By the mid- to late nineteenth century, when Russia’s industrialization took on pace, industrialists, financiers, and merchants accumulated sufficient wealth to divert some of it to charitable causes. This philanthropy covered a wide range of areas, from cultural institutions and the arts to social trusteeships or social welfare (Dinello 1998: 117 – 19). This period is most strongly imprinted in today’s philanthropists’ minds. Zonabend told me that prior to the First World War 50 percent of all educational institutions were funded by benefactors, and Christian schools were all privately funded by money from the community, the church, and private individuals: “The rich felt a duty to support the development of their country.” She evaluated their giving very positively, relating it back to the nature of the state: “It has always been like this here. We have always had a heavy bureaucracy with people at the top who have never particularly cared about the well-being of their people. So the responsibility to care about the country and its people fell to the rich.” Moving on to the 1917 Revolution, Zonabend deplored that this feeling of duty was lost as a result. Even worse, “many philanthropists of that time supported the revolutionaries.”

Under Soviet rule, the authorities fully institutionalized social welfare and forbade all philanthropic activities. They perceived them as a capitalist practice that undermined the role of the Communist Party (Kurilla 2002). Philanthropy lived on, however, operating under different terms. High-ranking party members patronized the arts even in the toughest of all times, the 1930s (Fitzpatrick 2015). In the post-war Soviet Union, charity was routinely provided through the various Communist Party organizations (Dinello 1998: 115). Some of my interviewees, such as Segalovich, remembered those disguised charity activities very clearly, as well as their own commitment to them when visiting orphanages and the like.

In the early 1990s, a small number of Russia’s new businessmen pursued philanthropic activities, but they were usually sporadic, unfocused, and uncoordinated. The population dismissed them as PR stunts as well as attempts of the new rich to soothe a guilty conscience and schmooze with the authorities (Gambrell 2004). After the economy had recovered from the 1998 financial crisis, charity rose rapidly (Khodorova 2014). An increasing number of businesses began institutionalizing their corporate philanthropy programs through corporate foundations. Major shareholders sometimes played a key role in this. Russian companies also began to embrace the notion of corporate social responsibility (Coutts 2014). This was influenced in part by intensified encounters with their Western counterparts and in part by Vladimir Putin. Frequently using the term social responsibility, Putin made it clear early in his presidency that he expected those who accrued a certain level of wealth to help fill the vacuum left by the withdrawal of the state. His encouragements had their intended effect. In 2006 almost 90 percent of donations in Russia went to state-run bodies financing health care, nursing homes, orphanages, and cultural institutions, thereby stepping in where the state had failed (Livshin and Weitz 2006).

Cynics regard such philanthropic efforts as pay-offs to remain in Putin’s good books. Roman Abramovich was famously obliged to pump large sums into Chukotka, a remote region in the Far East he had no previous link to but that he represented for years in the Federation Council, the Russian upper house. Some equally doubt that Magomedov’s interest in Dagestan, where he grew up, was primarily driven by care and compassion, rather than being a “necessary evil for winning favor with the Kremlin,” which is keen to see Islamic extremism in the region contained (Dzutsati 2014).

In 1999 Vladimir Potanin, the wealthiest Russian in 2015, created the first private foundation, named after him. Since then, the number of private foundations has grown steadily. As of 2013, there were around seventy of them in Russia, many of which are endowed by their founders (Coutts 2014). These private organizations have been established parallel to corporate ones, and some philanthropists channel their personal philanthropy through their business. Most of them want to have full control over their activities, which is one reason why many foundations implement projects directly, as opposed to allocating grants to intermediary organizations, usually nongovernmental organizations (NGOs).

Another reason is that the NGO sector in Russia is seen as corrupt, fraudulent, and incompetent (Livshin and Weitz 2006; Khodorova 2014: 19; Skolkovo 2015: 78, 81, 83). In the aftermath of the 2004 Orange Revolution in Ukraine, Putin accused foreign NGOs (among them Amnesty International) of being instruments of foreign influence, secretly undermining Russia’s interests. The introduction of two laws specifically targeting NGOs — the “foreign agent” law of July 2012 and the “undesirable organizations” law of May 2015 — weakened the sector further. While attacking the NGO sector, the government introduced a more favorable environment for private philanthropists (Coutts 2014). In 2007 an endowment law was passed that made the income earned from endowments tax free. In 2012 tax incentives were introduced for individual donors. Kremlin-loyal NGOs have gained in strength and prestige (Robertson 2009).

In many Western countries, philanthropists tend to give globally as well as in the area they are economically active, or in the neighborhood where they grew up (Freeland 2013: 73 – 74; Lloyd 2004: 55). Patriotism is an important feature of their giving, and Russian philanthropists focus almost exclusively on Russia. Within the country, there too are geographic peculiarities. As Russia’s hyper-rich are keen to control their giving and most of them live in Moscow, donations and philanthropic activities are concentrated in the capital and its surroundings (Coutts 2014). Parallel to this, natural resources are sourced from often very remote areas, and a lot of Russia’s heavy industry is either energy based or otherwise regionally concentrated. Most of these industrial centers were developed in late imperial Russia and Soviet times. In both periods, the state played the most crucial role in industrializing the country (Blackwell 1974).

When after the 1990s privatizations the oligarchs-to-be took over large industries left by the Soviet state, many of them ended up as the main employers in the region or town where their production, mines, or oilrigs were located. A crumbling social infrastructure, exacerbated by low wages and mass layoffs, caused severe social grievances. While not officially falling under the new owners’ responsibilities, the highly desolate conditions in many regions nevertheless threatened to tarnish their image. In response, many corporations set up their foundations in the areas where their factories are located — and, thereby, filled some of the gaps in the underfunded public infrastructure. Opened in 2004, the Mikhail Prokhorov Foundation, run by Irina Prokhorova, focuses its work around the Siberian city Krasnoyarsk, where the oligarch’s business is located. Theater productions and cultural activities feature prominently in the foundation’s program. Anatolii Sedykh has his main production in Vyksa, a town in the Nizhny Novgorod region. His foundation, led by his wife Irina, aims at “unifying the company’s work on a social level.” She also organizes an annual cultural festival in the town.

Prokhorova’s and Sekykh’s commitment to cultural development is somewhat reminiscent of the mission that Russian intellectuals — many of them from aristocratic backgrounds — pursued in the second half of the nineteenth century when they tried to teach the peasantry how to achieve a better life, some with a degree of paternalism, others with an enlightenment mission (Schimpfössl 2018: 106). “We want to unite people and encourage them to take part in other people’s life,” Sedykh said. She sees this as “a way of helping develop civil society.” Practically, this works via “volunteer participation” in the provision of care for disabled children. It has taken off, she said; every year there are more volunteers than the charity can reasonably integrate into its work.

In theory, strong state dominance, which heavily interferes in individual and corporate philanthropy, is incompatible with the concept of philanthrocapitalism. In Russia, however, philanthrocapitalism and a strong state can coexist harmoniously, as long as philanthropists accept the “rules of the game” dictated by the authorities. “Sure, many things are not quite clear here. That’s something one needs to simply accept,” Zonabend said. “But the state is not interfering,” she insisted. “In sum, there are great chances here. We have much fewer restrictions than you have in Europe.”

Educating and Enlightening the Russian People

The prospect of a return on investment has never crossed some of my interviewees’ minds. Eliseeva’s protégés would have little chance otherwise. They are from disadvantaged backgrounds, many with severe learning difficulties, some mentally disabled. She wants to enable them to develop skills by making them enjoy learning: “We paint together, we have music classes, theatre classes, clown classes, and so on.” Older ones can attend evening classes: Spanish, Italian, English, literature, and math. “You need to deal with these kids and challenge them; then everything will be very different.” Many people think that these children will never be able to read or write, but Eliseeva and her husband proved them wrong, as he told me: “Some of them even make it into college.”

Market-oriented thinking would not allow for Avdeev’s activities or Svetakov’s school either. Avdeev, a father of twenty-three, nineteen of whom were adopted, sees the key to improving the lives of orphans in winning the hearts of people able and potentially willing to foster children. There is not much financial gain in setting up a school for children with mental impediments, as did Svetakov; neither is there much appetite in Russia for a project of this kind, as he explained to me: “Our society likes the strong and healthy. It doesn’t like the weak and infirm.” Many of the children in his school are physically disabled or the children of alcoholics. “It’s not something many are comfortable with, you know,” he said. Friends in politics and business tried to talk him out of his project: why not a school for gifted children, they asked.

A school for gifted children is what Moshkovich set up. Within a new development project, he was contractually obliged to build fifty schools. As he sees schools as being crucial to “shape human beings (and all humans are able to be good),” he decided that, as he has to build schools anyway, he would build only good schools: “A strong school is easily explained: it’s an institution which not only teaches a child professional knowledge, competences, skills, morals, but has them undergo a complex development with clearly set goals.” Moshkovich, who went to an elite school specializing in mathematics, believes that he owes his success in good part to his school education. (This is one reason he describes himself as “Soviet — I’m a product of the Soviet period.”) Tsukanov went to the same school. He is also convinced that his education was excellent: “I don’t know why the communists did that, but they did.” Also in broader terms, he acknowledged the educational spirit in the Soviet Union, especially among educated families: “We had a big library at home and I grew up on books. It’s a typical Soviet story. We had nothing else except education and books.” Magomedov, who strongly identifies with his parents’ intelligentsia status, was convinced that his Dagestan school program would prosper as it builds on the Soviet legacy of investing generously in education.

Most of my interviewees were born into the Soviet intelligentsia, which consisted of professionals engaged in the cultural and educational sector as well as academically trained medics, technicians, and engineers. By the time of Joseph Stalin’s purges, the Soviet intelligentsia had largely lost their predecessors’ ideals of a humanistic search for truth and a self-effacing devotion to serving the people (Hamburg 2010). What they retained was a strong patriotic feeling of duty to the state, as well as the nineteenth-century perception of society being divided into two classes: the educated intelligentsia and the simple masses (Berlin 2008: 130 – 54). The former repeatedly went out to lift the latter from their ignorance and poverty, seemingly selflessly, as did, for example, the Narodniks in the 1870s. Today many upper-class Russians embrace the intelligentsia as a group on whom to model themselves (Schimpfössl 2018: 97). This has been one of the drivers for the new economic elite to distance themselves from the ostentatious lifestyles they used to indulge in and to identify more with cultural symbols (Schimpfössl 2014). Such attitudes reverberate in the interviewees’ calling — to enlighten the people. Some of my interviewees fancy themselves as moral leaders.

A self-perception as moral leaders is not necessarily in disagreement with a philanthrocapitalist philosophy. Sysuev sees his duty in enlightening and educating common Russian people so as to create “the social institute of charity” in Russia. Ordinary people should develop a need to do charity like “an everyday thing.” The shareholders finance the charity’s infrastructure and staff costs. The staff’s main task is to fundraise among common people for the surgery and treatment of severely ill children. In this way, the shareholders believe, they can instill in the people a desire to make charity part of their lives; thus they will become part of civil society. The shareholders’ end goal is, however, more ambitious: to “rehabilitate private property in Russia.” Sysuev explained: “The relationship to rich people is complex here in Russia. There is still the widespread belief that big money is stolen.” This was also the reason the shareholders kept their involvement secret for many years. They feared that it could jeopardize the whole project.

Social Reproduction

In one respect philanthrocapitalism cannot possibly claim to make any difference when compared to previous philanthropic endeavors: its effect on legitimizing and re-creating social class. Nevertheless, advocates of philanthrocapitalism evaluate this positively; great riches generate extra money, and this extra money can be invested into social projects. Furthermore, social status obliges and nurtures a feeling of duty. This is something that scholars scrutinizing elite culture have widely written about, among them famously Georg Simmel ([1908] 1992: 820) in his elaboration of noblesse oblige.

However personally motivated their giving may seem, in fact, it is often highly regulated through formal and informal rules. The elite is sensitive to questions such as who gives to whom, who is allowed to give, and who is allowed to receive. In the West, elite philanthropy is strongly related to being accepted by and identified with long-established, highly prestigious nonprofit organizations. Becoming a trustee of one of these indicates that one has socially “arrived” (Ostrower 1995: 36). In Russia, similar principles apply; however, they are realized through informal practices based on personal relations of trust. Whether formal or informal, such practices play the role of a social catalyst guarding the boundaries of social class and deciding who belongs to which elitist circles. Within these circles, very much in line with Marcel Mauss’s observations ([1898] 2002), interdependence and social obligations are created and re-created.

Apart from the bonding among upper-class peers, philanthropy is also one of the most important tools to create a lasting legacy of cross-generational wealth. The first generation of wealth in Russia is growing older and their members are coming closer to death. The assets they will pass on to their offspring are on an epic scale; we will soon see one of the biggest transfers of wealth the world has ever seen, particularly if one considers the small number of people involved (Schimpfössl 2018: 150). Against this backdrop, a certain training in philanthropy has become an integral part of what is considered a proper upbringing. Many children of the hyper-rich are on track to acquire legitimacy.

Avdeev would be delighted if his children continued his legacy by running his foundation, but, like many others, he stressed that this should be of their own volition. “It’s much more important to me that they live their own lives,” he said. “The older they get, the less I try to give them advice. An older child has a right to make his or her own decisions and make their own mistakes.” Avdeev’s children will have plenty of chance to do so. He does not intend to bequeath his wealth to any of them. What they receive is high-quality education, accommodation, and a car.

Zonabend and her husband also say they will not pass on their wealth to their children. Moshkovich and Svetakov intend to strictly regulate the amount their children will receive, while large parts of their fortunes will go to charity. Being deprived of a windfall inheritance is likely to enable the children to find a place in society that will make them appear deserving in their own right, regardless of the fact that they were born into privilege.

Social Inequality

Philanthrocapitalism has become fashionable at a time of increasing social inequality, with the wealth of a tiny group of hyper-rich multiplying exponentially. Never before in history has social inequality widened as rapidly as it has in Russia since the collapse of the Soviet Union (Scheidel 2017: 222; Therborn 2013: 8). In 2013 Credit Suisse declared Russia as one of the countries with the highest level of wealth inequality in the world (Keating et al. 2013: 53). The plunge in oil prices in 2014 undermined many of the gains made in the living standards of ordinary Russians during the early 2000s (Pirani 2010: 10; Tikhonova and Mareeva 2016: 162). However, rich Russians have barely felt the consequences of either the 2008 or the 2014 crises; the number of dollar billionaires recovered quickly (Forbes Russia2017).

Svetakov sometimes has difficulties understanding his less fortunate fellow Russians: “Our people are particular. They’ve had everything taken away, but they still endure it.” That should not cause him sleepless nights, others say. “The population has become a lot richer in the last twenty, thirty years,” Aven insisted. He admitted that there is a problem of income inequality (which, shockingly to him, is already as high as in the United States, he added), but “the group of very rich people is very small and they live separately from the rest.” As for tackling the problem of inequality, he sees the responsibility lying with the state: “It’s a question of social policy. Social mobility must work. There mustn’t be any nepotism.” He assured me that there is certainly not any risk “whatsoever” of social protests erupting in Russia.

Industrialists closely involved in day-to-day business are the most likely to face moral dilemmas. Anatolii Sedykh reduced his staff after the 2014 crisis hit. His wife told me that even up to the eleventh hour they tried to save their business projects, whether profitable or not. Their foundation tried to mitigate the consequences of these layoffs, she assured me. Moshkovich too seemed at loggerheads with the basic demands of capitalism and his own role in it: “I’m not a politician, I’m a small person. I don’t deal with inequality. I don’t care about inequality,” he said. The issue, however, does bother him “in an empirical sense, in cases where I encounter it.” His company employs fifteen thousand people. He noted: “When we increase productivity, this means mass redundancies. . . . We need to sack people all the time.” Even though he is not personally involved in any such executive processes, they clearly make him feel uneasy; after all, they clash with his idea of being responsible toward his workers, and his desire to secure them a decent life. (“We build houses for our employees, raise their wages, educate their children, and so on.”)

Critics of philanthropy, such as Edwards (2008), argue that governments achieved far more over the last century through implementing social programs, especially when pressurized by social movements and civil society. Avdeev might partly agree with that. He thinks that “rich people can only contribute with their ideas”; however, “the main discussion needs to run in civil society.” In general, Avdeev allots an important role to the people, a view that originates from his Soviet values. “The April theses? Bread to all?” he asked me. “How could one possibly not agree with that?” He then told me that he appreciates Vladimir Lenin, not least for his qualities as a gifted propagandist and journalist. Avdeev embraces Marxist ideas in general; “although there is a lot of utopia in Marx. Then again, utopian ideas are not only bad after all.” Eventually, Avdeev lamented that one crucial demand put forward by Karl Marx has not been implemented: the abolition of inheritance.

Conclusion

Attempts undertaken by the hyper-rich to legitimize themselves through philanthropy help strengthen ties between them and facilitate cohesion among the various elite groups. Zonabend and Vardanian are in many respects spearheading Russia’s new upper class. Their class consciousness is highly developed, witnessed not only by ensuring their children acquire high status, but by setting up an institution to coach Russia’s rich how to pass down wealth to their offspring in a sustainable way. As for their intrafamily reproduction, Zonabend and Vardanyan have gone one stop further by pledging to disinherit their children and give their money to charity instead. This is, in fact, the biggest favor parents can grant their children to give them legitimacy. It is the most powerful and impressive way the super-wealthy have to remove the stigma their children carry of being born with a silver spoon in their mouth.

The same is true for Aven and Sysuev. McGoey grants philanthrocapitalism a genuine novelty: the level to which benefactors are open about the fact that their charity enhances their business prospects (2012: 194). Albeit as part of a long-term perspective, Aven’s and Sysuev’s investment in charity has as its aim the rehabilitation of the status of private property in Russia; and this obviously entwines with their own interest. Yet again, as with Vardanian, they pursue not only their personal self-interest but also the interest of their class as a whole.

A factor that has greatly facilitated their (self-)legitimization is their intelligentsia identity, and this echoes in their philanthropic practices. Although to varying extents, Zonabend, Vardanian, Aven, and Sysuev presented themselves as educators who see their duty in teaching their common fellow citizens civil society values. The credibility of moral leadership benefits from historically founded status — birthright and entitlement — and this is what they claim for themselves, among other things, by emphasizing their intelligentsia background.

There is, of course, a factor that dampens such efforts to assume moral leadership: the radical economic transformation in the 1990s, which was the precondition of my interviewees’ riches. It could only acquire such a radical form because there was no significant force in society willing or able to contest the changes under way. This course of events was warmly welcomed by not only the liberal reformers in Russia but also their Western advisors, many of whom deplore the lack of a civil society in Russia today (Domrin 2003: 31n; Uhlin 2006: 163). None of my interviewees delved into this, which is interesting in itself. It indicates that Russia’s new upper class has not yet found an entirely convincing narrative about the origin of their money, which they today so generously give to charity.

All this does not necessarily make Russia’s hyper-rich unsuitable for philanthrocapitalism if it is understood not as an ideological idea but as a practical tool to justify wealth inequality. Arguing that private and corporate surplus money is the necessary precondition that sets free resources for philanthropy, however, has its own drawback: On the one hand, Svetakov and Eliseeva would not be able to run their projects for mentally disabled or otherwise disadvantaged children were it not for their riches. On the other hand, their projects would not exist if they reasoned purely in philanthrocapitalist terms. Their involvement with severely disadvantaged children does not fit into categories such as impact-oriented, measurable, result based, market savvy, high performing, cost effective, or financially profitable.

My interviewees were all born in the Soviet Union, most of them in the Brezhnev era. Their Soviet upbringing and education forms a major part of their identity. If they refuted their past, this would mean denying, to some extent, their own worthiness. This creates some conflicting ideas in terms of how they comprehend their role in the system and the new social hierarchy. This conflict is particularly apparent in Moshkovich, who perceives himself as a product of Soviet society, and Avdeev, who identifies with the ideological concepts that founded the Soviet project. As little related to philanthrocapitalism as such an analysis might sound, in a lighter and dampened version it has global parallels: the world’s richest are increasingly borrowing some terminology traditionally ascribed to the socially caring, occasionally even the radical Left, when talking about their efforts to change the world and connect with the common people (Forbes 2012).

Such efforts naturally stop short of challenging the status quo with regard to wealth distribution. Increased philanthropic activities and, in particular, the current fashion of philanthrocapitalism reflect the power of individual money and its extreme concentration. These circumstances reinforce its influence, not least in relation to the state. This is also the explanation for why there is very little tension, if not full-on cooperation, between philanthrocapitalists and the state. This is true even for Russia. Sure, some of the rich resent having projects allocated to them by the authorities. However, once they submit to the game and play it right, Russia is full of opportunities for those well established within the power system. Merging philanthrocapitalist and Soviet ideologies is in many ways doing the trick — and, to a large extent, characterizes Russia’s new upper class and the philanthropists among it.

Acknowledgments

I am grateful to the Leverhulme Trust for enabling this research through the award of a Leverhulme Early Career Fellowship.

Notes

  1. This study served as a model for many others. It was replicated in the United Kingdom (albeit following a more practice-oriented concept) by Theresa Lloyd in 2004, with a follow-up she wrote together with Beth Breeze in 2013 (Breeze and Lloyd 2013).
  2. All wealth indicators are taken from Forbes Russia.

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Elisabeth Schimpfössl

About Elisabeth Schimpfössl

My research focuses on elites, philanthropy and social inequality as well as questions around post-Socialist media and self-censorship. I did my PhD at the University of Manchester and taught at Liverpool University, Brunel and UCL before taking up my current post as Lecturer in Sociology and Policy at Aston University, Birmingham, UK. I live in London.